Here are my top 10 predictions for 2012. These are less readings of the tea leaves or the entrails of goats and chickens and more simple extrapolations of patterns in progress. Altho that may be the way effective oracles. They just masked their observations with hocus pocus, mumbo-jumbo, and guts.

This list runs a gamut from business and technology to energy, instability in the Middle East, micro-economics in the United States, politics, and not-yet-pop culture.

1.  Apple and IBM will continue to thrive. Microsoft will grow, slightly. Dell and HP will thrash. A share of Apple, which sold for $11 in December, 2001, and $380 in Dec. 2011, will sell for $480 in Dec. 2012.
2. The Price of oil will be at $150 to $170 per barrel in Dec., 2012. The price of gasoline will hit $6.00 per gallon in NYC and California.
3. There will be another two or three tragic accidents in China. 20,000 people will die.
4. There will be a disaster at a nuclear power plant in India, Pakistan, Russia, China, or North Korea.
5. Wal-Mart will stop growing. Credit Unions, insurance coops and Food coops, however, will grow 10% to 25%.
6. The amount of wind and solar energy deployed in the United States will continue to dramatically increase.
7. The government of Bashar Al Assad will fall.
8. Foreclosures will continue in the United States.
9. Arizona Sheriff Joe Arpaio will resign. Calls for Clarence Thomas to recuse himself from matters involving his wife’s clients will become louder, but Justice Thomas will ignore them. A prominent politician who says “Marriage is between a man and a woman,” or her husband, will be “outed” as gay. President Obama will be re-elected.
10. The authors of Vapor Trails will not win a Nobel Prize for literature. They will not win a “MacArthur Genius Award.” Nor will I despite my work on this blog or “Sunbathing in Siberia” and the XBColdFingers project.

Here are the details … Apple, IBM, Microsoft, Dell, & HP

Apple will continue to reinvent itself, bringing out “the best iPhone, iPad, iPod, iMac and MacBook – ever.” It won’t get Apple TV right, but no one will care. The Mac Mini will very quietly enter the server space, in workgroups, small companies and science and engineering labs. Software “apps” will be developed on iMacs and Minis for use in the field. It will continue grow by creating then exploiting new markets. It may even get Apple TV right one day. IBM will continue to thrive in computer hardware and software engineering and professional services.

As illustrated, their market capitalizations and stock prices will grow 25%. The valuation of Microsoft may grow 20%. Dell, and HP, however, will not grow more than 10% and will remain well below their historical peaks.

Financial analysts will come to regard Microsoft, MSFT, as analogous to an investor owned utility. They will note that it has completed it’s growth cycle and has leveled off, and will expect dividends, and continue to receive them. One way that it could grow dramatically would be to split into a three companies: a server software company, a business desktop software company, and a home software company, but that idea is 10 years old. They didn’t do it then; they won’t do it now.

HP will continue to gyrate without focus. They designed an inferior tablet, compared to the iPad, and an overpriced tablet compared to the Nook, Kindle and Kindle Fire, and face competition in the printer space from Canon, Sharp, and Xerox. HP will, in 2012, cede the laptop and workstation markets to Dell and Lenovo, and lose market share in the server market to Dell and IBM. They won’t care about the laptop and workstation markets because the margins are so thin, except for Apple, but the loss of the server market will be painful because there are margins and services there. HP needs a Lou Gerstener to make the elephant dance, and return to the “HP Way.” Fiorina didn’t do it. She tried to remake HP in her image rather than return to what Hewlett and Packard did that made HP great. I don’t know if Whitman will do it. She won’t do it in a year, and may wind up fired by a Board that is impatient and bored.

Dell will continue to take it’s customers for granted and treat them badly. While this may not rise to the level of the 2008 settlement between the Attorney General of New York and Dell Computer and Dell Financial, (NY AG Dell site here / NY Times coverage here) bad customer service will not get better. Dell is growing by acquisition, which is an expensive way  to gain customers, typically requiring tremendous leverage putting a heavy burden on staff. It will sacrifice morale for statistics.

This will reflected in the stock prices. Apple, and IBM will increase 25% to 480 (AAPL) and $225 (IBM). Microsoft may grow 20%. Dell, and HP will gyrate but end the year where they started. The Dow Jones Industrial Average will increase about 10% to 1320.

The price of oil will end 2012 at $150 to $170 per barrel. The price of gasoline will hit 6.00 per gallon in California and New York City. People will drive less, and when they buy cars, they will buy more efficient new cars.  Increased CAFE standards, click here for overview, 27.5 mpg, since 1990, which Obama will again try to increase, will continue to annoy Republicans and Tea Party faithful, who will buy more efficient vehicles anyway.  Meanwhile fleet efficiencies will climb faster than the CAFE standards mandate as businesses and municipalities factor in fuel and maintenance costs in the life cycle analyses they perform. Parking lot solar energy systems will spread from California, Texas, and New Jersey to other parts of the country. These will feed the grid and charge electric cars driven by commuters, and generate revenue for the owners.

Nuclear Power & Disasters.

There will be a disaster at a nuclear power plant in India, Pakistan, Russia, China, or North Korea. If Russia, we will not learn of it for days. If China or North Korea we will not learn of it for weeks. If India, the government will blame Pakistan. If Pakistan, the government will blame India, the United States, and Israel. This will have the unintended consequence of driving stronger ties between Israel and India. We will see battery powered Tata Motors cars in Israel, as well as Europe. These will be commuter vehicles. They will not displace trains. We will continue to see high speed rail displace inter-city and regional airplane traffic. And trains will continue to grow, particularly in Europe and Asia.  We will look for evidence of leaked tritium at various nuclear power plants, and find it wherever we look.

There will be another two or three tragic accidents in China in which 20,000 people will die. This will take place in a coal mine, an elementary school, a railroad, a housing project or an airport, another example of unregulated totalitarianistic state capitalism.

Wal-Mart v Credit Unions and Food Co-ops.

Wal-Mart will stop growing. Part of this will be due to gas prices, and higher priced poor quality goods from China. People will stop buying cheap crap they need to replace quickly, and start demanding – and paying for – good, durable, locally sourced goods – goods that are good.

Credit Unions, Mutual Insurance Companies and Food Co-Ops will grow 10% to 25%. Credit Unions and Insurance co-ops will grow, in part, as a result of the “Occupy Wall Street” movement. We will also see a slight increase in organic and sustainable farming.  The margins will increase because people will pay more for healthier and better tasting food, and manure will cost less than gas based fertilizers. Ranchers will also begin deploying manure to methane cookers, and will run farm equipment on manure. They – we – will also plant gardens, eat less meat, and get healthier.

Energy  Pundits (funded by coal, methane, and oil industry interests) will continue to call for fracking and carbon sequestration. Politicians will listen oblivious to the facts on water use or pollution costs that will be externalized to future generations. At the same time, conservative politicians will begin to re-assess energy subsidies for coal, oil, methane, and nuclear.

Solar energy capacity in New Jersey and California will increase by about a third, from 400 MW to 600 MW, in Jersey, and from 700 MW to 1 Gigawatt in California. Solar will spread to Florida, New York, Massachusetts, Connecticut, Texas, Arizona, New Mexico, Nevada, Colorado, This will be accompanied by a price drop to below $5.00 per watt, and additional technology breakthroughs in manufacturing and design efficiencies. These phenomena will feed each other in another positive, or reinforcing feedback loop.  Small solar will spread to aboriginal communities in Africa, Australia, South and Central America, and remote parts of Asia.

Iowa gets 20% of it’s electric power from the wind today. This will increase to 25% over 2012.

Wind, hydro, solar hot water, and geothermal will increase by 25% in the Pacific Northwest.

1.0 gigawatts of nameplate capacity in one or two old coal or nuclear plants will be decommissioned, replaced with wind, solar, geothermal, and insulation. This will be done for reasons, having as much to do with economics as the environment.

1.0 million homes in the US will be retrofitted with R25 or better insulation in the walls and attic.

Ground – or water – will be broken as the first offshore wind farms in US waters will be started, either Cape Wind, in the Horseshoe Shoals off Nantucket, or the New Jersey wind farms.

There will also be design breakthroughs in offshore hydro-electric, or marine current generation, and deep geothermal.

The government of Syria will fall, but, as is happening in Egypt, the military will take or hold power. Bashar Al Assad will be killed, like Muammar Gadaffi, by the people at whos heads he has pointed his guns, or he will find refuge in Tehran, Iran, Baghdad, Iraq, or, like Idi Amin, Riyadh, Saudi Arabia. Iran and Turkey will compete to fill the power vacuum. Since the government of Iran is unstable – the people are hungry for democracy as well as food- this round will go to Turkey. Hamas will continue embrace the Palestinian Authority. It will also continue to call for the destruction of Israel. Without support from Syria, Iran, Iraq, and the Saudis, these cries will grow louder, harsher, more shrill, yet less effective. The Israelis, however, will grow more frightened and will respond with harsher methods. It’s a reinforcing feedback cycle. Hamas will continue to execute people who call for peace with Israel. Calls for divestiture of Israel by the left in the US and Europe will be ignored.

Back in the US, foreclosures will continue, driving property values down. Many will remain unsold as credit will be expensive and speculators will be cautious.  However, as energy prices climb, and as effective insulation can be made from recycled cellulose (newspaper) treated with boric acid, people who have some equity will invest in negawatts, and nega-fuel-watts. And they will plant gardens.

The Republican Party will be divided over calls by Newt Gingrich and business owners for amnesty for undocumented workers (here), calls by Mitt Romney and Wall Street to allow “the foreclosure process to take its course” (here), and by citizens opposed to the appearance of a biases in favor of illegal aliens and Wall Street “Banksters.” People will turn away from the GOP as they will see adherance to Grover Norquist’s pledge as destructive and unpatriotic, and the focus by John Boehner, Eric Cantor, Paul Ryan, on cutting taxes for the 1% while raising taxes on the 99%, which people will perceive as a transfer of wealth to the very wealthy. Arizona Sheriff Joe Arpaio, who is said to have cost Maricopa County $43 million in lawsuits, will resign over his alleged bias against Latinos. The calls for the impeachment of Clarence Thomas, over conflict of interest for not recusing himself over business dealings of Ginny Thomas – Mrs. Justice Thomas – will get louder. Another two or three married members of the House or Senate will be involved in a ‘sexting’ scandal. There will be a scandal involving a prominent Republican politician or her husband involved in ilicit sexual liasons with a professional sex worker of the same gender. This will be immortalized with “Marriage is between a man and a woman. But with sin; anything goes!” The unemployment rate will drop below 8.2%. Elizabeth Warren will be elected Senator from Massachusetts, the Democrats will regain control of the House. Barak Obama will win re-election to the Presidency.

“Vapor Trails,” by Bob Siegel and Roger Saillant will not win a Nobel Prize for literature. Nor will I despite my work on this blog or “Sunbathing in Siberia” and the XBColdFingers project. “It’s Rainin’ Outside the Cave” featuring “Sunbathing in Siberia” and other songs of peace, love, and global warming will not become a hit record. Neither Emenim nor Kanye West will do a ‘rap’ version. Rianna will not do a duet with me . Lady Gaga will not moan a version of it. Brittney Spears will not ask about covering any of my songs as part of her “Comeback Tour.” Neither will Justin Timberlake, Justin Beiber, Arlo Guthrie or Tom Paxton. Nor do Siegel, Sallant, or myself seem likely to win MacArthur “Genius Grants.” However, we will develop a screenplay of Vapor Trails which will feature some of my songs, and we ink a film deal.

Tweet At the conclusion of the GOP debate, Wolf Blitzer thanked CNN‘s partners, the American Enterprise Institute and the Heritage Foundation. This partnership explains the framing of the debate on energy as “Burn Baby Burn” or “Drill Baby Drill.”

No questions were asked on the potential for renewable energy technologies, such as wind, solar, geothermal, hydro. Nor were questions asked on climate change or on the pollution and cleanup costs from coal, oil, gas, or nuclear.

Energy policy and climate are linked, and could be addressed in one question:

This summer people in Texas experienced an extended drought and 100 days in which the temperature was over 100 degrees (CBS). Is this normal? Is this the ‘new normal?’ If this is triggered by burning so much carbon based fuel in the last 200 years that we have elevated the level of atmospheric carbon dioxide from about 260 parts per million in 1800 to about 390 ppm today (350.org), and we have burned mountains of coal, lakes of oil and gas, is it prudent to continue to burn coal, oil, and gas, or should we embark on a plan to transition to non-fossil-carbon sources of energy, such as wind, solar, hydro, geothermal, etc? And if so, how quickly?

This could also be asked in a national security context:

Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, identified energy and climate change among the constraints which, in his words, “could place the United States at a strategic turning point…. Glaciers are melting at a faster rate, causing water supplies to diminish in Asia. Rising sea levels could lead to a mass migration and displacement similar to what we saw in Pakistan’s floods last year.  And other shifts could reduce the arable land needed to feed a growing population in Africa, for example. Scarcity of water, food and space could create not only a humanitarian crisis but create conditions that could lead to failed states, instability and, potentially, radicalization.” (NRDC / WWF) What does this mean for the USA in the next 4 to 8 years and what should the President do about it?

Amory Lovins of the Rocky Mountain Institute once highlighted the value of efficiency saying “the cheapest unit of energy is the one you don’t have to buy.” He termed this the ‘Nega-watt.’  If the ‘Negawatt’ is the cheapest unit of energy, then next cheapest unit of energy is the ‘Nega-Fuel-Watt,’ (here) the one obtained without consuming fuel. What would a transition to fuel and pollution free energy mean for the economy? Would it make us more competitive? Less competitive?

Environmentalists like Vice President Al Gore and Bill McKibben and businessmen like Eric Schmidt and Richard Branson have argued that we should move to 100% renewable energy in 10 or 20 years. We are now seeing a ‘Moore’s Law’ on the price – performance ratio of photovoltaic solar.  Several companies have announced technical breakthroughs in design and manufacturing that promise to increase efficiencies and cut costs. California and New Jersey lead the United States in solar. So the question is not “Can we transition to clean energy?” Rather it is “How can we transition to clean energy? How quickly? What would it mean for the economy? What will it mean for national security?

Other questions I would ask the candidates,

Rick Perry said he would privatize the TSA to get rid of the unions, altho it is hard to see that this would lower costs, except by eliminating benefits and hiring uneducated workers or illegal aliens. Ron Paul might get rid of the TSA but he wouldn’t privatize it. Similarly, Gov. Perry might privatize prisons, Rep. Paul would legalize drugs, end the ‘war’ on drugs, and, presumably, set free people held in prison on minor drug charges, shutting down some prisons – saving the taxpayers money. The questions are “How exactly does privatizing government agencies save money?” and “What agencies do we need?”

Many members of Congress have signed Grover Norquist’s pledge (here) to “oppose tax increases.”  In “Stop Coddling the Super-Rich, Warren Buffett argue that his marginal tax rate is lower than his secretary’s, and that this is unfair and bad policy. Other countries in Europe and Asia use tax revenues to support industries, education, and health care. While cutting taxes in time of a surplus may be a good idea, how do we finance national security, infrastructure, and other initiatives without tax revenues? Which taxes are legitimate? Any? If taken literally, does this pledge conflict with the oath of office (here) to uphold the Constitution?

Ron Paul consistently asks ‘What is the purpose of government?’ Should the government build schools and roads, i.e. infrastructure? Where does it end? Should the government mandate that people buy health insurance? Mitt Romney wants to partially privatize the Veterans Health Administration, VHA, and give veterans vouchers to use to buy health care. (See Paul Krugman’s column, ‘Vouchers for Veterans’, here). Rather than gut it, perhaps we should expand the Veteran’s Health Administration into the ‘Citizens Health Administration’ to provide health care for all citizens, tourists, guest workers? Lincoln, who defined our government as “Of the people, by the people, and for the people” might say yes.

If it is legitimate for the government to operate agencies such as the Department of Defense, the Army, Navy, Marine Corps, the VHA and the Federal Bureau of Investigation and for local government to operate local police departments; if it is, therefore, legitimate to protect the nation from external threats and to protect the citizens and their property from miscreants who would point a gun at their heads and say something like ‘Your money or your life!’ and if it is reasonable for the FBI and the Defense and Intelligence communities to secure water systems from terrorists who might engage in biological warfare, is it reasonable and legitimate for the government to operate an executive agency with police authority to protect the citizens and the environment from pollution, from people who, while in the name of making money, rather than ideology, engage in activities in which the long term consequences include damaging the biosphere and making people sick? That would be the EPA. And that would be a call for more regulation and strict enforcement to prevent events such as the Kingston Tennessee coal ash flood of Dec. 2008, the Deepwater Horizon incident of 2010. If Army, Navy, Marine Corps, and FBI are legitimate, why not the EPA?

Regarding the ‘Arab Spring,’

The questions from the American Enterprise Institute and the Heritage Foundation seemed to be ‘When should we go to war with Iran?’ and ‘Should we expect Israel to attack Iran?’ These questions pre-suppose that someone should attack Iran. Is that really a good idea? It seems clear to me, here at Popular Logistics, that the war in Iraq, which cost over 4,000 American lives, tens of thousands of wounded veterans, and $1.0 trillion, created a regional power vacuum which was filled by Achmadinejad and the Mullahs of Iran. But today Iran and Syria can’t feed their people, and the countries are unstable, particularly Syria. The United States worked within NATO to support the people on the ground in Libya, with the result that Muammar Gaddafi was removed from power. Recep Erdogan, the Prime Minister of Turkey – our ally in NATO – has urged Bashar Assad to step down (Wash Post).  How should we engage with the people of Iran and Syria? How should we support pro-democracy movements in the Middle East? How do we work with allies in the Middle East, including Israel and Turkey to help them maintain their stability in the face of instability in Egypt, Syria, the Palestinian territories?

If the process of democratization in the Middle East began with the election of Hamas, a non-democratic movement which uses terrorism to advance its foreign policy goals, how can we support democratization when non-democratic forces which use terror win elections? And we give a tremendous amount of aid to Egypt, $1.1 Billion a year, most in the form of military aid. The questions are: “What should the ‘Arab Spring’ mean for American-Egyptian, American-Israeli, American-Persian relations?” and “What should the ‘Arab Spring’ mean for the relations between Israel and the Palestinians and Israel and her neighbors?”

Finally,

I would ask Mitt Romney “How could you strap a dog to the roof of the car for a 12 hour drive from Boston to Ontario?” and “Who cleaned the poop off the roof?” (Time Magazine report).

–

Oath of Office for members of the House of Representatives, here:

“I, __, do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter. So help me God.”

Norquist Pledge, here:

I, __, pledge to the taxpayers of the __ district of the state of ___, and the the American people that I will:

ONE, oppose any and all efforts to increase the marginal tax rates for individuals and / or businesses; and
TWO, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by furthor reducing tax rates.

Norquist home pages, here and here.

Tweet Via NPR‘s All Things Considered, from correspondent Richard Harris, Feds Delay Decision On Pipeline Project

The State Department is delaying a decision for at least a year on whether to approve the Keystone pipeline. The $7 billion pipeline would carry oil from the tar sands of Alberta, Canada, through the U.S. to Gulf of Mexico refineries. Nebraska’s state government and environmental groups have put intense pressure on the State Department and White House to reject the pipeline’s proposed route. NPR’s Richard Harris talks with Robert Siegel about the project.

Audio here (available after 1900 hours Eastern time, 10 November 2011).

Wikipedia’s entry Keystone XL Pipeline has a detailed – and, in our view, fair – account of the controversy.  While on balance we do not support the Keystone pipeline, a very well-reasoned argument in favor of the pipeline can be foundon the blog of JEH Land Clearing, from which we’ve taken the following map of the proposed pipeline (route in red; other pipelines indicated are already in existence/operation).

The Texas economy will benefit from the increase in production. The area east of I-35 is consistently in economic hardship (Port Arthur’s unemployment rate is hovering around 15%), and the construction, land clearing, surveying and refinery jobs will help lower the staggering unemployment rate. It is estimated that the Keystone Pipeline will help create over 20,000 jobs. Texas alone will see over $2.3B in new spending and the US will see about $20B in new spending. The increase of personal income in the state will be about $1.6B and the US will see an increase of $6.5BB. Profits will be re-invested in the local economy improving the quality of life and increasing the number of business in the area. Regardless of where you stand on this issue, one fact remains; the only one way to get heavy crude from Canada to the Texas gulf coast is a pipeline.

Excerpted from Oil Pipeline Invigorates Texas Economy

We support public works projects as economic stimulus, particularly those which come with improvements to energy and other infrastructure; in our view a massive wind/solar public works project in Texas might have the same effective economic stimulus with a better energy outcome, with a significantly lower environmental impact

What JEH doesn’t mention are the costs in terms of environmental damage, water, and health effects. These are long term costs, which are, in the parlance of neoclassical economics, “externalized,”or pushed into the future, and pushed off the balance sheets, kind of like CDO’s, or Collatoralized Debt Obligations, made famous by the financial crisis. Ecological economics recognizes that these costs must be considered, just as recent economic history forces us to recognize the real value of mortgages and mortgage backed securities. As we are learning, ignoring risk is unwise. Put bluntly, the Keystone XL pipeline is kind of like a $1.0 Million “McMansion” sold for $25,000 down, with a $1.0 Million mortgage which is, of course, a negatively amortized interest-only note for the first 5 years – at which time the borrowers will have to pay $1.1 Million, plus interest. But in reality, the $5 billion pipeline is like an aggregated set of five thousand negatively amortizing $1.0 Million toxic McMortgages on McMansions built of radioactive materials on toxic waste sites below sea level.

We intend to elaborate on the costs, risks, and benefits of pipelines in future posts; as well as a series on the Bonneville Power Administration, which has been supplying electricity in the Northwest for almost 75 years, and which we think is a model for energy-related public works projects.

Green Living Festival

Tweet I am presenting “Beyond Fuel: From Consuming Natural Resources to Harnessing Natural Processes,” a discussion of the hidden costs, or “economic externalities,” of nuclear power, coal, and oil, and the non-obvious benefits of wind, solar, marine hydro and efficiency at the Space Coast Green Living Festival, Cocoa Beach, Florida, Sept 17, 2011.

The festival  is sponsored by the Cocoa Beach Surfrider Foundation and the Sierra Club Turtle Coast Group. It will be at the Cocoa Beach Courtyard by Marriott.

Cocoa Beach is about 60 miles east of Orlando and 120 miles north of West Palm Beach. It is easily accessible by air, land, sea and space.

This will be similar to the presentation I recently gave to the NYC Business Sustainability Minded Action Round Table (Click here or here).

It is during hurricane season. Hopefully life will not be imitating art as portrayed in Vapor Trails, by Roger Saillant and Bob Siegel, and the conference will not be cut short by a hurricane of Katrina-like proportions.

Tweet

The Associated Press via the Sacramento Bee reported that “Exxon Mobil Corp. earned $10.7 billion … its highest quarterly profit since the third quarter of 2008…. However, Exxon officials noted that sluggish business investment, lower consumer spending and high debt would continue to weigh on the economy.”

Let’s do some math – Exxon earned $10.7 Billion this past quarter. Yet Exxon and other big oil companies receives $2 Billion to $3 Billion per year in tax subsidies. If divided equally, then Exxon would get $400 to $600 million per year, $100 to $150 Million per quarter. The subsidies amount to 0.93% to 1.4% of Exxon’s profits of $10.7 Billion this quarter, and 0.108% to 0.16$ of Exxon’s annual revenues of $370 Billion for the year ended 12/31/10 (Google Finance). This is equivalent to giving someone earning $50,000 per year a gift of $54 to $81.

A lot of people need help: American college students need help paying tuition, Americans on Medicare and Medicaid need help paying their medical bills, and Americans on Unemployment need help paying for food, people trying to design and build a renewable sustainable energy infrastructure. But we are helping oil companies.Why?

Let’s look again at the numbers. For the year ending Dec. 31, 2010, Exxon’s Gross Revenues were $383 Billion. Gross Profits were $107 Billion, and Income Before Taxes were $53 Billion. Profit was 27.9% of Gross Revenues.  Income before Taxes was 13.8% of Gross Revenues.

And according to Valeri Vasquez, at the Center for American Progress, here, Exxon’s tax rate is 17.6%. The nominal corporate rate is 35%.  With profits of $53 Billion last year, rather than receiving subsidies. Exxon should have paid $18.55 Billion in taxes last years. With profits of $10.7 Billion last quarter, Exxon should have paid $3.745 Billion.

On May 12, 2011, Batarzyna Kilmaninska and Jim Snyder reported on Bloomberg.com, (Exxon Leads Defense of Tax Breaks Democrats Want to Repeal) that

Exxon Mobil Corp. (XOM) Chief Executive Officer Rex W. Tillerson and four counterparts defended $21 billion in U.S. tax breaks that Democrats are seeking to recapture to reduce the federal deficit.

Executives from Exxon, Royal Dutch Shell Plc (RDSA), Chevron Corp. (CVX), ConocoPhillips and BP Plc (BP/) said costs may rise and gasoline prices increase if Democrats succeed in eliminating the benefits. The plan is “counterproductive,” Tillerson told the Senate Finance Committee at a hearing today in Washington.

Senate Democrats are proposing to raise oil and gas taxes by about $2 billion a year for 10 years, arguing that widening deficits are a threat to the economy and sacrifice is required. College students are giving up federal help, and so should the companies, said Senator Charles Schumer, a New York Democrat.

“We have to choose priorities and right now we have a huge budget deficit,” Schumer said to ConocoPhillips (COP) CEO James Mulva. “Do you think that your subsidy is more important than the financial aid that we give to students to go to college?”

We see the answer to this question – “NO!” in the Exxon’s own report: “Exxon officials noted that sluggish business investment, lower consumer spending and high debt would continue to weigh on the economy.”

Sima Gandhi, writing on American Progress, April 14, 2010, here, noted that tax subsidies for big oil, about 88% of total federal subsidies in 2006, are not necessary for the health of the oil industry.

While the AP article noted that oil demand worldwide is expected to hit 89 million barrels per day this year, we also think that a much better use of the money would be to subsidize the transition to a clean energy economy, making homes energy efficient, building new transmission lines, and extending the deployment of wind, solar, geothermal, and other clean, renewable, sustainable technologies.

NRG Energy

  Tweet Will moving to the new energy future – deploying Solar, Wind and other sustainable alternatives create 2.7 Million New Jobs?

At “How Cities and Companies Can Work Together to Operate in the New Energy-Constrained Economy” a panel discussion (press release), Bruce Katz, Vice President and Director of the Metropolitan Policy Program, Brookings Institution, said “2.7 million new jobs” will be created in moving to the clean energy / low carbon economy.

Mr. Katz also noted that two out of three Americans – 200 million people – live in the 100 biggest metropolitan areas, and those 200 million people are responsible for 75% of our GDP. High carbon energy is no longer cheap. The people in those metropolitan areas, and elsewhere, therefore, must act.

40 KW PV solar array at the ferry terminal in NYC. L Furman, June, 2011.

Mr. Katz joined David Bragdon, New York City’s Director of Long-term Planning and Sustainability, (NYC / Mayor’s Office / PlaNYC), Steve Corneli, Senior Vice President for Sustainability, Strategy and Policy, NRG Energy, and Scott Bolick, Vice President, Sustainability Solution Management, SAP, for a 90 minutes to discuss:

• The programs and initiatives cities, municipalities and corporations have in place to reduce energy usage, while remaining competitive.
• The role of technology in reducing energy use.
• The impact on local businesses, both commercial and manufacturing of a transition to a low carbon economy.
• The role of utilities in creating a more energy-efficient and competitive environment.

One take-away: it’s not only treehuggers and people with an MBA in “Sustainability,” such as from Bainbridge Institute, The Fowler Center at Case Western, Marlboro College, the Presidio. People at places like the Brookings Institution, the City of New York, the Pentagon, energy companies like NRG Energy, and companies like SAP, Ferrari, and WalMart are asking these questions.

by Sunoptics, used to provide illumination and lower electricity demand. This photo was taken in a retail space at 7:00 PM on a cloudy day. L Furman, 6/26/11.

Journalists and bloggers were invited to listen to the panel and ask questions. I was invited as a blogger thanks to my work on 3BL Media and here on Popular Logistics. In addition the panelists and organizers, I met people from Forbes, Scientific American, Green Biz, and Climate Central. The event worked very well as a panel discussion / lecture / seminar. While I would have gladly spent more time networking with journalists and other bloggers, this did not serve as a networking event.

Mr. Corneli is enthusiastic about electric cars. This is not surprising: he’s from NRG – a company that generates and sells electricity. He spoke of the NRG electric car program in Houston (See also Christopher Helman, in Forbes / Bailey McCann in Civsource). While electric engines are more efficient than internal combustion engines, electric cars can be only as clean as the electricity that powers them, and you must factor in the loss in energy as the electricity is moved across transmission lines. I think an internal combustion engine is about 15% efficient in turning hydrocarbons into power to transport people. A coal plant is about 33% efficient in turning coal into electricity. There are also line losses – about 7 to 10 percent – in transmission. So an electric car engine is about 31% efficient. (93% times 33% equals 30.69%.) Of course, to get a complete picture we need to consider the logistics and the supply chain. Fuel must be extracted, process, and transported.  Gasoline must be transported from well to refinery to gas pump, and coal must be transported from mine to plant. We get gasoline from deep under the Gulf of Mexico (think Deepwater Horizon), Canadian tar sands, or our good friends in Saudi Arabia, and Venezuela.  I think we bought oil from Iraq in the ’80′s and ’90′s. Alan Greenspan once described the war in Iraq as a ‘War for Oil’ (here). We get coal by blowing up mountains – literally – in West Virginia. While blowing up mountains is bad for the environment, it’s West Virginia, not a foreign country with foreign policy goals and interests that might be different from ours. But I digress.

The discussion was interesting, productive. Here are some other take-aways:

• Energy is a socio-economic and national security issue. It is not a political issue, it is not left or right, Democratic or Republican, Socialist, Communist, or Capitalist.
• Climate change is real and anthropomorphic. The evidence is developed via scientific means, and by answering the questions regarding happens when you move 500 billion tons of carbon from underground, where it is stored as coal, oil, or methane, into the atmosphere in the form of carbon dioxide? What happens when you (we) increase the concentration of carbon dioxide in the atmosphere from about 280 ppm in 1800 to about 390 ppm today to about 450 ppm in the not-too-distant future? (This should not be a political issue. It should not be left or right ….)
• Tomorrow’s economy will be constrained by energy and resources. And those constraints are beginning.
• Some people are acting, others are in denial. The people who act sooner will be better positioned than those who act later, and those who are in denial. This also holds for companies and nations.
• This paradigm shift to a low carbon economy could create 2.7 million jobs in the USA, quickly.

Mr. Katz said we are facing a “disruptive moment.”

“Our economy has been driven by exports and innovation,” he continued, ”We also must transition to a low-carbon energy. Carbon based energy is no longer cheap. The US doesn’t look at energy from within a strategic framework. We must. It’s a fiscal imperative. ”

David Bragdon, New York City’s Director of Long-term Planning and Sustainability, agreed. Clean water is expensive. Waste disposal is even more expensive. David spoke about PlaNYC . Like the system pictured above on the Whitehall Street terminal of the Staten Island Ferry, the City is planning on large PV Solar installations on closed landfills in Staten Island and Brooklyn and considering wind turbines where the winds are strong.  The City should perhaps consider a solar array on the public schools, high schools and park buildings, and various campuses of City University of New York, and other public buildings. It could also consider a small battery of wind turbines offshore of Staten Island, Brooklyn, and Queens.

Had I been invited to participate as a speaker, I would have discussed the feasibility study I wrote on the logistics, economics, and finance of 152.5 mw of PV solar on the public schools, community colleges and universities in New Jersey (Press release here).

I would also have repeated the bold strategic challenges issued by Al Gore in 2008: “100% clean electricity in 10 years,” and Barack Obama in 2011: “80% renewable energy by 2035,” and outlined my response:

• 100 gw landbased wind
• 100 gw offshore wind
• 50 gw pv solar
• 50 gw deep geothermal
• 100 giga-nega-watt-equivalents of efficiency.

Courtesy of ILoveMountains.org

As a listener, I asked about comparing wind and solar to nuclear and coal. “There are no fuel costs associated with wind and solar, and there are no waste management costs,” I said.  “The economic externalities of wind and solar are less than nuclear and coal – even without Fukushima, Deepwater Horizon, Upper Big Branch, Kingston Steam Plant coal ash pond flood – how do we price externalities into the model?”

This sparked a dialog on the economic externalities of new plants against old plants that have been operation 30 or 40 years – that have been paid for – and can be kept running, albeit inefficiently?

A consistent theme on this blog has been the role of the government and  comparisons of solar and wind to coal, oil, and nuclear. If we take out the subsidies for solar should we not consider social costs and cleanup or waste management costs for coal and nuclear? How do we price or value national security implications of these technologies?

While the economic externalities of non-sustainable fuel based energy paradigm create costs, which add to GDP, the economic externalities of sustainable energy create assets, which may reduce Gross Domestic Product, GDP, but increase the Genuine Progress Indicator, GPI. For example offshore wind farms create artificial reefs, which nurture fish and birds.  Rooftop solar arrays shade the roof of the buildings on which they are mounted – preserving the life of the roof and lowering cooling requirements. While new nuclear and coal with sequestration cost more than new wind and new solar, existing coal and nuclear plants have been amortized and therefore appear to be less expensive to run than new wind and solar.

It is easy to say “We need to end our reliance on coal and nuclear, and move to solar, wind, geothermal, efficiency, and other alternatives.” Consider business as usual – mountaintop mining – and business as unusual – coal ash spills, floods at nuclear power plants, etc. It’s easy to conclude that we must. Meanwhile, Mr. Corneli and his colleagues at NRG Energy generate power for about 52 million people in about 20 million households. NRG and other companies in its sector generate power for 307 million Americans. Changing the energy mix can not happen overnight. We can’t simply shut down all the coal and nuclear power plants and all the oil refineries.  Shifting the paradigm will take work, time, and money.  Still, Germany is doing it, and we can do it to. And if Mr. Katz, Mr. Bragdon, and others (including this blogger) are correct this will stimulate the economy in ways that are good for society, our children, and the economy as measured by GPI (if not GDP). (Click here for “My Metric is Better than Your Metric,” a comparison of GDP and GPI.)

Personally, I think the government must make policy decisions to catalyze a transition to a clean sustainable economy. To extend Adam Smith’s canonical metaphor, “The invisible mind of society must direct the invisble hand of the market so it doesn’t shoot itself in the invisble foot of the bio-humano-sphere.”

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This is the first post in a series. The next will explore the macroeconomic impacts of 2.7 million new jobs on the economy and the bio-eco-econo-system that is the United States. Others may explore how power companies view sustainability, how SAP is cutting its carbon footprint and helping other companies cut their carbon footprints,  the highlights of PlaNYC, and sustainability plans of cities as diverse as Chicago, Illinois, New Bedford, Massachusetts, and Brattleboro, Vermont.  However, the constraints of spare-time blogging are such that there are more posts that could be written than actually get written.

in black and white, because some ideas are.

Tweet    During the Great Depression the Classical Economists said “Unemployment is voluntary. Business owners will not voluntarily keep the means of production idle.”  While he had been a student of classical economics, John Maynard Keynes observed that the data didn’t fit the theory. And, he reasoned, if the observable data don’t fit the theory, the theory must be flawed.   “Business owners are risk averse,” he saw. “A employee needs to be productive, needs to make widgets. But if no one is buying widgets, then contrary to classical theory, factory owners will fire workers and keep capital idle rather than hire workers to create excess inventory. That’s just common sense.”

We see this today.

When unemployment was low, for example in the United States during the tech boom of the 1990′s, people acted on the premise that “There is so much work that we could hire and good people and train them.”  Today hiring managers seem to be acting on the premise that “There are so many people looking for work that they can wait for the perfect candidate.” Perfection being unattainable, jobs go unfilled. This is ok, in this context, because

• “Budgets are tight.”
• “The future is uncertain.”
• “Money not spent on a new hire can be saved or used to pay down debt.”

Keynes also observed that the government is an employer that does not need to worry about going out of business. Building infrastructure is government employment that is investment for the future. These observations are as valid today as they were 80 years ago.

Back to the problem of today’s unemployment, we also see hiring managers faced with dozens, perhaps hundreds, of qualified applicants, including many who are out of work, and many who are “over-qualified.”  Suppose a hiring manager has 100 resumes. Each has two pages and a one-page cover letter.  At one minute per page, it would take 300 minutes – 5 hours – to read the resumes and cover letters.  Assuming half are qualified applicants, and the hiring managers throws darts, he or she has a 50/50 chance of finding someone good. While no one with integrity would do that; HR must read resumes and talk to people on the phone trying to send the hiring managers a reasonable number of the best resumes. The level of specialization in today’s world makes the job harder. If someone talks slowly in a phone interview are they thoughtful, looking up the answer on the Internet, or stupid? Again, with 20 or 50 new resumes each day, why not wait?  HR and hiring managers may say “these applicants seem to be really good, but are they? let’s see who else is out there.”

The decision to hire the employer closes the door to all other candidates. If the new employee doesn’t work out, which may not be evident for 3 to 6 months, the employer has to fire the employee – which costs time and money, and and then go thru another round of search, weed out, and ultimately hire.  From the employer’s perspective the biggest risks are that the prospective employee is either incapable of doing the job, as advertised on the resume, or unwilling to do the job, and as promised in the sales call that is the interview.

But let’s take a step back. Let’s look at the economy from 30,000 feet, or 10,000 meters, and look thru the lens of “sustainability.”  Consider what our competitors in other countries are doing. Every developed country except the United States has a single payer health care system which covers every citizen and even tourists. A high speed rail system links people in Europe from Madrid to Rome, Paris, Berlin, Vienna, Amsterdam, and London. Germany is replacing their nuclear plants – which 10 years ago provided 29% of their electricity and today provide 20% – with clean, renewable, sustainable energy from wind, solar, and combined cycle hydro and biofuel systems.  What about a domestic high speed rail infrastructure efficiently linking cities from Boston to Miami, New York to San Francisco, LA to Seattle (and Vancouver) and Chicago to Denver to Dallas, Houston, Austin, Reno, LA, and Mexico?

Can we do this? How long would it take? How much would it cost? What is the multiplier? How many jobs would be created? We have 14 or 15 million unemployed people, millions others who have been out of work so long that they are not counted, and countless more who are underemployed! How many jobs would we create building a sustainable energy infrastructure and a high speed rail infrastructure?  With wind turbines offshore of the East Coast in up and down the Great Plains and solar modules on the roof of our homes, schools, office buildings, stores and factories? And with insulation and cogeneration basically doubling building energy efficiency?  Can we retrain unemployed coal miners in manufacture of solar modules, mounting systems and wind turbines?  The answer is of course. The questions that matter are “How much would it cost?” and “Can we afford not to?”

In the last 210 years we – humanity – have increased atmospheric carbon dioxide from 290 parts per million and about 2.8 trillion tons to 390 ppm and 3.6 trillion tons.  Looking at the data Arrhenius concluded that increasing carbon dioxide in the atmosphere would make summers warmer in Scandinavia. He was right.  However, we now know that burning fossil fuels contributes to storms, floods, the death of coral reefs and the challenged food supply of climate change. We also know that domestic oil production peaked in 1971 and international production is peaking now.  Do we want to blow up every last mountain in Appalachia for coal?  Do we want to destroy water supplies for methane?  Don’t we realize that sooner or later we, or our children, will have to shift the energy paradigm to one that is sustainable?  And beyond that, fuel free energy systems cost less. While this actually hurts GDP – GDP measures spends not value – repair of the damages caused by the earthquake – tsunami – nuclear disaster at Fukushima (IAEC Log) and the Deepwater Horizon will contribute to GDP – but these decrease Genuine Progress Index (wiki). These are ‘Uneconomic Growth.” Fuel free energy systems contribute to the Genuine Progress Index and other indices that measure wealth and happiness.

Earth from Space, courtesy of the American taxpayer. Reto Stöckli, Nazmi El Saleous, and Marit Jentoft-Nilsen, NASA GSFC

Tweet

Earth Day, 2010, I looked to the future on Popular Logistics. In 2009, I wrote about water pollution and agricultural waste in the Chesapeake. Today I am looking at the present and recent past. While a comprehensive look at where we are can be found on the web pages of the World Watch Institute, the New York Times, and the World Factbook of the Central Intelligence Agency, I want to make a few points.

Our energy policy is “when you flip a switch, the juice gotta flow.” It ain’t magic. It’s engineering and classical physics, with an understanding of radioactive fission and decay and a profound lack of long term thinking. It ain’t magic, but it might as well be. But we really need to base our energy policy on an understanding of ecological economics and sustainability.

We’ve had a few problems with nuclear power and fossil fuel in the last few years. Yet, there’s some light on the horizon.

Regarding those problems with fossil fuel …

December 22, 2008, a flood of 1.2 billion gallons of toxic coal ash at the Kingston Steam Plant on the Clinch and Emory Rivers, upstream of Kingston, Tennessee, here or here. April, 2010, a disaster at the Upper Big Branch Mine in Montcoal, West Virginia (here). One of the results of the accident was that Massey Energy, the company that operated the mine, was sued by institutional investors who alleged corporate malfeasance. And then there was the catastrophic spill of 50,000 to 70,000 barrels of oil per day into the Gulf of Mexico for three months. These, I said, were the “Fossil Fuel Trifecta of Disaster.” My series began with “Fossil Fuels and a Walk on the Moon.”  BP’s stock – and “market capitalization” was cut in half. While it has since recovered somewhat, it is still well below the level immediately prior to the spill. BP has also lost good executives to the nascent biofuels industry.

Also back in 2009, I started covering the “Purgen Plant,” a “Rube Goldberg” design for a coal plant with carbon sequestration, here.  The technology is incredibly expensive – $16 to $18 per watt – and spectacularly stupid. The plan is to use 25% to 40% of the output of the plant to capture 90% of the carbon, then compress it and pipe it 70 miles along the sea floor, then bury it 1 mile beneath the bottom of the ocean. It will cost the taxpayers billions, as long as nothing goes wrong.

More recently I’ve been writing about the unfolding earthquake – tsunami – nuclear disaster in Japan beginning with  Earthquake, Tsunami, and Energy Policy and concluding with Nuclear Power, What Future? But there are two important points – under “normal” conditions nuclear power produces less radioactive waste than coal, and the wastes from nuclear power plants are regulated. Under real world conditions, nuclear plants leak tritium and other radioisotopes into the biosphere. Look to this blog for more posts on this in the future.

Yet, there is some good news.

• Cape Wind, LLC finally got the permits they need to build America’s first offshore wind farm (see Cape Wind, Leadership and Vision).
• The solar energy industry is strong in New Jersey and California, and expanding.
• The FDA expects America’s rural electric coops to continue to move into renewable energy.
• Bright, dedicated, passionate and beautiful people are thinking about sustainability in places like Bainbridge, Columbia Earth Institute, the Fowler Center at Case Western, Marlboro College, the Presidio, UVM.
• Large institutions such as Deutsche Bank – one of the 10 largest banks – and Zurich Reinsurance are concerned about climate change. Click here and here. concerned about climate change.

In addition to my work on this blog, my song “Sunbathing in Siberia” may not be “American Idol” fare (and that’s part of the problem) but my friends dig it, and my “Earth Energy Haikus” were posted on Amida’s web site. The problems we write about on Popular Logistics are complex “systems” problems. They have developed over the last 50 or 100 or 200 years. They can’t be fixed with a magic wand. We need to look long and hard at various paradigms, such as energy and consumption, and how they need to shift. In his lectures, his book, “Sustainability by Design” and on his blog, John Ehrenfeld defines “Sustainability” as “Flourishing forever.” Doing it is the conundrum.

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The image of the “Blue Marble” was created by Reto Stöckli, Nazmi El Saleous, and Marit Jentoft-Nilsen, at the Goddard Space Flight Center, NASA GSFC. It is described here.  “This true-color image shows North and South America as they would appear from space 35,000 km (22,000 miles) above the Earth. The image is a combination of data from two satellites. The Moderate Resolution Imaging Spectroradiometer (MODIS) instrument aboard NASA’s Terra satellite collected the land surface data over 16 days, while NOAA’s Geostationary Operational Environmental Satellite (GOES) produced a snapshot of the Earth’s clouds.”

NY Times Special (Business As Usual) Energy Section

Clifford Krauss’ “Can We Do Without the Mideast?” sets the tone for the “Special Energy Section” in the NY Times, March 31, 2011. “The path to independence – or at least an end to dependence on the Mideast – could well be dirty, expensive and politically explosive.” Is this an April Fool’s Day joke? The path to sustainable energy requires vision and hard work. a solar array on every roof and insulation in every wall and every attic. It will be better for the economy, better for the environment, and better for ourselves, our children, and our grandchildren.

There is an article about the demand for new nuclear power installations in “China, India and other regions” (like Pakistan and Iran). Matt Wald’s article about carbon sequestration suggests that it is far from proven technology, but we know it will be expensive. This is not news. While there are ads for renewable energy, one by an oil company, the other by Scotland, there are no articles about wind, solar, hydro, including small hydro and marine,  geothermal, and the negawatt virtual turbines of conservation and efficiency.

Krauss cites President Nixon and the 1973-74 Arab oil embargo, President Carter “calling an effort to reduce our dependency on foreign oil “the moral equivalent of war,” President G. W. Bush, Krauss said “called oil an addiction.” And President Obama said, “We cannot keep going from shock when gas prices go up to trance when prices go back down.”

And we have seen, in addition to the economic, banking, housing bubble pop, and employment crises, the energy system Trifecta of Disaster Plus One.

1. 12/22/08: Flood of 1.2 Billion Gallons of coal ash – laden with toxic heavy metals from arsenic to lead to mercury to zinc, and including uranium 235, U 238 and thorium.
2. 4/7/10: the accident at the Big Branch mine in Montcoal, W. Virginia. 29 miners dead.
3. 4/22/10: the Deepwater Horizon Catastrophe: 5.1 million barrels of crude gushed into the Gulf of Mexico, plus an unknown quantity of (toxic) dispersants poured into the spill like a magic potion to make it seem to disappear.
4. 3/11/11: earthquake, tsunami, irreparable damage to six to 12 nuclear reactors at three complexes in Japan, fires in the spent fuel storage pools, and release of clouds of radioactive gases and the release of radioactive materials into the Pacific.

On Jan. 25, 2011, in the State of the Union, President Obama called for an infrastructure shift to 80 % clean energy by 2035.  (See my analysis here.) This is the bold vision and strong action we need. We need to redesign our energy infrastructure and rebuild it around clean, renewable, sustainable energy and efficiency. For example: 200 gigawatts of nameplate capacity wind, 100 gigawatts of nameplate capacity solar. Rather than a chicken in every pot and a car in every garage, we want a solar array on every roof and insulation in every wall and every attic. It will be better for the economy, better for the environment, and better for ourselves, our children, and our grandchildren.

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Lawrence J. Furman, MBA.
The author, who earned his MBA in Managing for Sustainability at Marlboro College writes on energy, sustainability, and systems dynamics.